Cta Says Study's Proposal For Cutting Costs Unrealistic

December 05, 1996|By Flynn McRoberts, Tribune Staff Writer.

The Chicago Transit Authority is bloated with excess inventory and could save up to $46 million by changing the way it buys everything from bus parts to office products, according to a private consultant hired by the CTA's parent agency.

"We don't think the numbers are realistic," said John Kallianis, chief of staff at the CTA. "Some of the calculations and a lot of the assumptions are incorrect."

Mercer, for example, figured the CTA could save more than $430,000 by selling off excess plastic cable ties, which the firm figured the CTA was buying at $24 apiece. The agency, however, says it pays less than 14 cents for each tie, so they would only get about $2,400 if they sold the extras.

CTA staffers, who are still going through the documentation Mercer used to make its estimates, are much more conservative in their calculations. Counting some actions outlined by Mercer and others already under way at the agency, the CTA budget assumes about $5 million in savings for the 1997 budget year.

A big chunk of the savings estimated by Mercer--$32 million--would come from one-time economies such as selling off excess supplies. An additional $14 million could be saved each year from privatizing certain services and other measures.

The Mercer study is the first of several to look at ways the CTA can trim costs as it faces a $20 million budget gap in 1997 and possibly bigger shortfalls in succeeding years.

The first phase of the study dealt with purchasing and inventory management. Later studies will address CTA facility repairs, track and structure maintenance and overnight bus service.

Well aware of the sensitive nature of cost-cutting, RTA officials were quick to say that the estimated savings were not iron-clad. "No one at the RTA is holding the CTA accountable for these numbers," said RTA spokesman Chris Robling.

The RTA has budget authority powers over the CTA but cannot dictate specific changes in operating policies.

On Thursday, the RTA board is scheduled to consider increasing Mercer's contract by up to $250,000 to pay for the firm to analyze the CTA's facility maintenance operations. If approved, the change would increase Mercer's consulting contract to a maximum of $577,500.

In addition, the RTA board will discuss an ordinance to authorize Mercer to begin carrying out some of the recommendations for saving money on purchasing and inventory. But the CTA board would have to approve that step, and that will not happen until the RTA and CTA agree on how to measure the current system.